House panel cracks down on offshore businesses

From Ted BarrettCNN Washington

WASHINGTON (CNN) --House Democrats, seizing on sentiments to reform corporate behavior, won a key vote Tuesday to prevent government contracts from being awarded to companies that move offshore in order to avoid paying taxes.

The issue -- known technically as "corporate inversion" -- has been at the center of a recent Democratic public relations initiative to portray Republicans as soft on corporations.

"The president was talking today about corporate responsibility,but actions speak louder than words," said Rep. Rosa DeLauro, D-Connecticut, a sponsor of the amendment. "These corporations are enjoying all the benefits of U.S. citizenship but refusing all of the responsibilities. They put profit ahead of patriotism, even during a time of war."

Despite opposition from GOP leaders, 16 Republicans joined Democrats to support the amendment to a spending bill for the Treasury Department and Postal Service.

Aides on both sides of the aisle called the vote significant because of its symbolism but also predicted the language would be struck from the bill when it is considered on the floor because Congressional rules prevent "legislating on an appropriations bill."

A Republican aide on the Ways and Means Committee said the tax-writing committee will address the problem of corporations moving offshore in a comprehensive tax reform bill expected on the floor next month.

"People are concerned about inversions on both sides of the aisle," the aide said. "They're dealing with the political side where they can send out press releases."

The bill would prevent government contracts from being awarded to corporations "in a tax haven country" but whose stock is traded principally in the U.S.

The tax haven countries include Barbados, Bermuda, British Virgin Islands, Cayman Islands, Commonwealth of the Bahamas, Cyprus, Gibraltar, Isle of Man, the Principality of Liechtenstein, the Principality of Monaco and the Republic of Seychelles.